Online money transfers are available in three different ways in India. These include Immediate Payment Services (IMPS), Real Time Gross Settlement (RTGS), and National Electronic Fund Transfer (NEFT). These electronic payment systems let you transfer money between banks in the same nation. NEFT and RTGS are well-liked among these payment options, especially by business owners who frequently conduct numerous transactions. Therefore, it is essential to comprehend NEFT and RTGS's differences. Let's start by defining two different forms of fund transfers that is NEFT vs. RTGS.
What is NEFT
NEFT, or National Electronic Funds Transfer, is an electronic means of online money transfer that is governed by the Reserve Bank of India. The majority of Indian banks offer the NEFT feature for mobile and internet banking. There are no extra transaction fees associated with NEFT money transfers. The processing of NEFT transactions happens in various batches. The cut-off time for these transactions has been established by the Reserve Bank of India.
Must Read: E-Banking: Advantages, Disadvantages & Importance
What is RTGS
Real-time Gross Settlement, or RTGS, refers to the process through which funds are moved instantly and without delay from one bank account to another. If you need to transfer a sum equal to or greater than Rs. 2 lakhs in real time, RTGS is an ideal payment option. Contrary to NEFT, RTGS does not adhere to any particular processing methodology; as a result, the money is settled instantly and without any delays. Every transaction and instruction are executed using RTGS, which streamlines and expedites the money transfer procedure.
Difference between NEFT and RTGS
However, the difference between the two must be known to the people so that the transactions that they make are fraud free and we know exactly how much we need to take care of before we make a transaction.
Transaction charges
If the transfer is made online with NEFT, no fees are assessed. However, fees could be charged for offline NEFT transactions through a bank branch that requests the service. Regarding RTGS transactions, there are no fees associated with this kind of fund transfer.
Timings
You can transfer money at any time of day using online RTGS and NEFT operations. Both services are accessible and available around-the-clock, every day of the year. However, because certain banks and their branches are in charge of initiating the transfers, the offline NEFT facility is governed by the policies and deadlines of those institutions.
Amount limit
As previously stated, NEFT transactions are not subject to minimum or maximum transfer limits. It is simple and convenient to transfer amounts ranging from 10 to 1,000,000 INR in a single transaction. Though, there is a minimum restriction of INR 2 lakhs for each transaction using RTGS. You can transfer any amount of money with RTGS because there is no maximum transaction limit. However, it should be remembered that banks may set upper limitations based on their sense of risk.
Which one is faster
It is clear from the distinctions mentioned above that NEFT vs. RTGS is two quite different fund transfer methods. While no minimum or maximum amount can be sent via NEFT, RTGS transactions can only be completed if the transfer value is equal to or greater than Rs. 2 lakhs. Similar to how RTGS transactions are performed instantly, NEFT transactions take about two hours to process.
Who manages NEFT and RTGS
While the Reserve Bank of India (RBI) introduced NEFT and RTGS, the National Payments Corporation of India (NPCI) introduced IMPS.
When to use RTGS and NEFT
If you must select between these two payment choices, you can do so based on your needs, which are listed below:
- If you need to transfer a modest amount and the transaction doesn't need to be completed immediately, you might use NEFT as your fund transfer method.
- As an alternative, RTGS should be your preferred method of financial transfer if you need to send a sizable sum of money immediately.
Must Read: RTGS Meaning in Banking: How to Do it, Timing, Charges & Limits
What do you need for NEFT and RTGS
RTGS and NEFT online transactions require a current or free savings account. A person without a bank account can still transmit money using NEFT. Such a person must deposit cash at the closest bank branch that supports NEFT. A beneficiary with a bank account at a different bank supporting NEFT may be the transfer recipient. For these transactions, a cap of INR 50,000 applies. Click here to download the app for such transactions.
Final Words
No matter which method you select, it is crucial to remember that they are both equally safe, secure, and controlled by the Reserve Bank of India. NEFT and RTGS are reliable payment methods that help the digital, cashless goal of developing the nation's advanced economy. However, we must know that these details are subject to changes in guidelines made by the Reserve bank of India.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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